I have always subbed skim milk (that's all I drink) in place of the dry. So I would use 1/2 cup of milk and 1 1/2 cups of water. I wouldn't think the fat content of whole milk would make much difference. I find no discernable difference, it is such a small amount.

A more precise substitution for the 1/2 cup powdered dry milk and 1-1/2 cups water would be 1-1/2 cups milk and 1/2 cup water. I imagine either way will give you good bread, but there are some areas where the milk/water difference would make quite a difference.

To get 1 cup of milk, place 1/3 cup of powdered milk in a 1 cup measure and fill the cup with water. These figures are for instant powdered milk, they may be different for the non-instant kind.

The fact is that while milk powder adds weght IT DOES NOT ADD VOLUME it disolves freely in waterso while 8 oz of weght plus 1 oz milk powder = 9 oz by weght it is still 8 oz by volume (one cup) so if you are subing 1 oz of milk powder and 1 cup water the replacment would be 1 cup milk(as i sait there are other changes to account for the lactouse and milk fat but in small home mixes there is so little the change it wall make not be noticed and if going from skim milk powder and water to fresh skim milk the fat is still zero and the lactose will also be the same. Ps: 4 oz of milk powder by weght mixed into 1 quart (by volume) will yeld 1 quart by volome of milk that is the industry standered ( 4oz powder milk per quart water)in most formulas the dry milk is added with the dry ing Ie sugar flour there is no need to reconstute the milk in the water before adding it to the formula. It will reconstute when the water hits it during mixing